TOKYO -- Toshiba's flash memory unit is kept in domestic hands after all, but Japan's semiconductor industry remains a shadow of its former self, outpaced by South Korean competition.

The Japanese conglomerate said Friday that it has completed the sale of Toshiba Memory. Though American private equity firm Bain Capital has become the top shareholder in the memory company with a 49.9% stake, Toshiba and Japanese optical products maker Hoya control the remaining 50.1%

Toshiba was the only Japanese company to rank among the world's top 10 chipmakers by sales last year, according to U.S. research firm IC Insights, a far cry from Japan Inc.'s dominance in the 1990s. The company has stayed in the game thanks to its technological know-how and capabilities as the inventor of flash memory.

One major battleground for Toshiba Memory and Samsung involves 3D flash memory, in which memory cells are layered on top of each other to increase capacity. This area demands the technology to etch tiny holes in the cells to form circuits connecting the layers, said Akira Minamikawa of IHS Markit.

Chipmakers need money and talent to compete. South Korea and China have poured national resources into their semiconductor industries, including capital spending and the cultivation of engineers. Japan has been hesitant to offer incentives such as tax breaks and support for corporate investment.

Tokyo has lagged in creating an environment conducive to companies undertaking massive capital outlays and fostering the talent needed to develop cutting-edge technology. This has been to the detriment not only of Toshiba, but also to other chipmakers including Renesas Electronics, which on Friday announced plans to close underperforming production facilities.

Toshiba's challenges extend beyond outside competition. The company is set to book roughly 1 trillion yen ($9.19 billion) in profit from the memory unit sale, prompting S&P Global Ratings to upgrade its rating Friday on Toshiba's long-term debt by three notches to BB from B. But activist shareholders are clashing with new Chairman and CEO Nobuaki Kurumatani over how to use the proceeds.

Kurumatani's comments about the importance of acquisitions have rubbed many of these shareholders the wrong way. Since investors took the risk of buying into the foundering conglomerate, they think Toshiba should prioritize rewarding them by repurchasing shares before considering acquisitions.

The June 27 general shareholders meeting likely will present the first such challenge for the new chairman. A representative at a foreign investment fund said the firm intends to vote against Toshiba's proposed slate of directors, including Kurumatani.

Buybacks are on Toshiba's agenda. Near the end of its announcement Friday on the Toshiba Memory sale, the conglomerate said it will "consider implementing early shareholder returns" and may take necessary accounting steps to that end in the July-September quarter.